RMD:HOUSING:BM:JK:f:\housing\resource\share\infoitems\Prop I FY01-02.doc INFORMATION ITEM

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1 RMD:HOUSING:BM:JK:f:\housing\resource\share\infoitems\Prop I FY01-02.doc September 30, 2002 Santa Monica, California INFORMATION ITEM TO: FROM: SUBJECT: Mayor and City Council City Staff FY01/02 Annual Report required by Section 2120 of the City Charter regarding City Participation in Low Rent Housing Projects@ INTRODUCTION This report represents the annual report required by Section 2120 of the City Charter regarding low rent housing projects@ that are subject to Article XXXIV of the State Constitution and that have received City planning approval or funding commitments during the previous fiscal year. BACKGROUND Article XXXIV of the State Constitution requires local voter approval before any low rent housing project@ may be developed, constructed or acquired in any manner by any public body.@ On November 3, 1998, the citizens of Santa Monica approved Proposition I, which added Article XXI to the City Charter. Article XXI grants annual authority to the City to develop, construct or acquire low rent housing projects@ (Section 2110). This total annual authority is equal to one-half of one percent (2 of 1%) of the total number of residential units existing in the City at the end of the prior fiscal year. Additionally, the City may carry over@ any unused (unit) authority for three years. The City=s typical method of participation in low rent housing projects involves providing loans to nonprofit affordable housing developers using housing trust funds. Section 2120 requires that staff prepare an annual 1

2 report for the City Council regarding the previous fiscal year=s activity. DISCUSSION Section 2120 directs that the following information be contained in this annual report: 1) total number of affordable housing units subject to Article XXXIV which received City planning approval or funding commitments in the previous fiscal year; 2) total number of housing units existing in the City as of the last day of the previous fiscal year, and adding the number of newly constructed housing units completed and subtracting the number of housing units that were demolished; 3) total number of housing units representing the prior year=s carry allocation; and 4) total number of housing units authorized for the current fiscal year, including the carry units. Exhibit 1 contains all of the backup information for this annual report, including an inventory of low rent housing unit produced in FY01/02, and calculations of Proposition I authority. During the reporting fiscal year (FY01/02), the City was authorized to develop, construct or acquire@ a total of 498 low rent housing units (2 of 1% of 49,214 total City residential units [246 units], plus 252 carry over@ units from previous fiscal years). A total of 159 low rent housing units received City planning approval or funding commitments during this period. Consequently, during the reporting year, 159 of 252 carry over@ unit authority was expended, and none of FY01/02's new authority of 246 units was used. This leaves a carry over balance of 339 units for the next fiscal year (FY02/03). The total number of housing units as of June 30, 2002 was 49,917 (49, new units 2

3 completed - 37 units demolished). Therefore, the current authorization (FY02/03) of low rent housing units is 250 (2 of 1% of 49,917 total housing units in the City), plus 339 carry over@ units (FY01/02 authorization of 498 units minus 159 units of FY01/02 authority used), for a total of 589 ( ) units that the City may develop, construct or acquire during FY02/03. The affordable housing projects included in this report all received binding funding commitments (executed commitment letter or loan agreement) during the fiscal year. The City may have other projects in the pipeline that are expected to receive planning approval or a funding commitment but are not included in this report because the approval or commitment has not yet been granted. Ten (10) of the housing units listed in this FY01/02 report involve one acquisition project which was predominantly occupied by low income households at the time the City provided a binding funding commitment to these projects. Staff believes this project may be exempt from Article XXXIV, based on Section 37001(f) of the State of California Health and Safety Code which specifically exempts projects when: The development consists of the rehabilitation, reconstruction, improvement or addition to, or replacement of, dwelling units of a previously existing low rent housing project, or a project previously or currently occupied by lower income households [emphasis added], as defined in Section ". However, due to the ambiguities in Section 37001(f), these acquisition/rehabilitation projects have been included in the count. 3

4 CONCLUSION The City was authorized to develop, construct or acquire up to 498 units of low rent housing during the Fiscal Year 2001/02, and utilized 159 units of its Proposition I authority (the last 8 units of FY99/00 carry-over@ authority and 151 units of the 244 FY00/01 carryover@ authority). Therefore, 93 units of the FY00/01 authority is remaining and may be carried over through Fiscal Years , and all 246 units of the unused FY01/02 authority of may be carried over through Fiscal Years Additionally, 250 units of new authority is available beginning FY02/03. In summary, the City may develop, construct or acquire 589 units during the Fiscal Year 2002/03 (339 carry-over@ units units of new authority). Prepared by: Jeff Mathieu, Director, Resource Management Department Bob Moncrief, Housing and Redevelopment Manager Tad Read, Housing Administrator Jim Kemper, Senior Administrative Analyst Attachment: Exhibit 1 - Prop. I Annual Report - FY 01/02 4

5 EXHIBIT 1